AGI pushes for cancellation of electricity subsidy for residential users

The Association of Ghana Industries (AGI) has called on government and the Public Utilities Regulatory Commission (PURC) to review the utility tariff regime that obliges them to subsidize utilities of residential consumers.

Currently, residential users of electricity pay 60 per cent of the cost, while industry and government pay for the remaining 40 per cent.

Members of the AGI are thus pushing for the cancellation of the policy direction that adds a portion of the cost of residential users to their utility cost. They claim it increases their utility cost, contributing to a high cost of production.

If a proposal by the AGI is accepted, it could increase the electricity cost of residential users while industries will enjoy a reduction.

At a press briefing on the first quarter of AGI’s Business Barometer, the President of the AGI, James Asare-Adjei said AGI is “reminding the PURC of the need for reclassification of consumer categories and the review of the current electricity tariff structure so as not to disadvantage the industry.”

“Records show that almost all countries have their tariffs for industry lower than residential power users, however the situation is the opposite when it comes to Ghana. This is stifling growth in the private sector.” he said.

Responding to the calls Tuesday on Onua FM, the Director of Public Affairs at the PURC, Nana Yaa Jantuah said the Commission is in the process of reviewing customer classification but was skeptical industry will be excused in subsidizing the electricity of residential users.

“It is not possible industry will stop subsidizing for residential users since Ghanaians are not ready to pay for full cost of electricity,” she said.

“Ghanaians are even calling for a further reduction in the current electricity tariff and so “a 40 per cent increase in cost of electricity for residential users will automatically result in increase in cost of living for Ghanaians,” Nana Yaa Jantuah said.

Confidence in business executives

Meanwhile, the AGI Business Barometer indicated a rise in confidence of business executives in the economy during the first quarter of 2016, as it went up by almost six points over that of the last quarter of 2015.

The business barometer indicator for the first quarter hit 101.9 points, higher than the 95.9 points that was reordered for the last quarter of 2015.

This was largely due the stabilized depreciation of the Ghana Cedi against major trading currencies and the relative increase in power supply.

Mr Asare-Adjei commended government for implementing policies that had contributed to the stabilization of the currency against major international currencies.

“AGI urges government to do everything possible to sustain and improve on the relative macroeconomic stability in this election year,” he said.

“We expect government to keep its expenditure budget within limits to avoid over runs that is typical of election years. The current budget deficit of 7.1 per cent must be further reduced,” he stressed.